Commentary

Biden’s (at least) $12 billion rescue of a state that refuses to rescue itself

March 17, 2021 7:23 am

Nevada’s Democratic governor and legislators have always had only the one plan: “Help us, Obi Joe Biden. You’re our only hope.” (Official White House Photo by Adam Schultz)

More than 2.6 million Nevadans – roughly 1.85 million adults and 751,000 children, according to Institute of Taxation and Economic Policy (ITEP) estimates – will get $1,400 direct payments under the American Rescue Plan signed into law by President Joe Biden.

The Congressional Research Service calculates it a little differently, estimating more than 1.4 million households will receive direct payments.

Either way, it works out to a total of more than $3.7 billion provided to Nevadans, pretty much immediately.

Nearly 180,000 Nevadans will be eligible for $300 a week in federal unemployment benefits through September 6, according to estimates cited by the state’s congressional delegation. Some of those people will be called back to work before then (he said, hopefully). But between now and September the extended unemployment benefits provided to Nevadans will likely total more than $1.3 billion.

Estimates for the aggregate state impact of a couple other large components of the American Rescue Plan (ARP) aren’t immediately available — the Congressional Research Service for example hasn’t sussed them out.

But for what it’s worth I took a swing at them.

The expanded and revamped child tax credit program is effectively a monthly allowance for families. The relief bill raised the annual credit from $2,000 per child to $3,600 for children under 6 and $3,000 for those under 18. And the credit is fully available even to families with no income to tax. The enhanced benefits will be distributed to families in monthly payments of between $250 and $300 per child a month, with the balance paid when they do their 2021 taxes in 2022.

ITEP calculates the average additional child credit benefit for Nevada households with children will be $2,750. And ITEP estimates about 1.3 million people — 600,000 adults and 700,000 children, would benefit. Let’s say those 1.3 million people live in 300,000 households, which I think is a lowball number but let’s use it. That would mean the child tax credit will inject an additional $825 million into Nevada households this year. And again, that’s probably an underestimate.

The child tax credit expansion is being described as a step toward a universal income. Others call it Social Security for children. The revisions are a one-year thing, for now. The right objected vociferously to all the “socialism” when FDR and Congress created Social Security. But occasional modern-day Republican calls to privatize the system have been routinely and easily batted down. Congressional Democrats are already laying plans to make the monthly allowance to families a permanent fixture, as they should. And then Republicans can campaign on their commitment to killing Social Security for children.

Another change — and this one is permanent — to the tax code in the ARP roughly triples the earned income tax credit to workers without children. Low income childless adults have never been a favorite constituency of Congress — especially since Bill Clinton was crafting the apotheosis of decades of Democratic capitulation by declaring “the era of big government is over” and the “end of welfare as we know it.” Expanding the earned income tax credit pushes back against the ensuing 25 years of widening inequality. And by ITEP’s estimate, 268,000 Nevadans will get an average enhanced benefit of $780, translating to about $209 million for Nevadans.

Some of the other money coming Nevada’s way in the ARP, as outlined by congressional offices, policy organizations and other sources, includes but certainly is not limited to:

  • $1.07 billion for K-12 education
  • $204 million for higher education
  • $165 million for rental assistance
  • $151.6 million for public transit
  • $87.5 million for food assistance

And you’ve probably already heard about the $4.1 billion to help Nevada’s cash-strapped state and local governments, which includes:

  • $2.9 billion for the state
  • $597 million for counties (including $439.6 million for Clark and $91.5 million Washoe)
  • $285 million for cities (including $130.6 million for Las Vegas, $53.8 million for Reno, $47.1 million for North Las Vegas, $36.8 million for Henderson, and $17.1 million for Sparks)
  • $151 million for 14 Nevada towns, from Boulder City to Winnemucca, that aren’t cities.

Add up the numbers in bold above and you’ll get $11.6 billion. That’s what I got anyway.

The total doesn’t include money and benefits that will come to Nevada, but for which state-by-state data is not readily available. For instance:

  • Larger Affordable Care Act subsidies
  • The 100 percent subsidy for COBRA coverage
  • Nevada’s share of ARP’s $93 billion for vaccinations and other direct covid public health spending. 
  • Tax credits to help offset the cost of child care
  • Nevada’s share of ARP’s $15 billion for small business emergency loans
  • Nevada’s share of another $7.5 billion for the Paycheck Protection Program

And that’s not an exhaustive list. The $12 billion in the headline is the most conservative part of this column.

Brother, can you paradigm?

State and local officials are delighted about the rescue bill, and none more than Gov. Steve Sisolak and Democratic legislators, who have had just the one plan all along — wait for Biden and Congress to save them.

But they haven’t been. Saved, that is. To use the charismatic megafawn of state public policy —  something that simply everyone says they are for —  holy sacred education funding amen, the ARP education money is pretty much a one-time shot. A one-time shot won’t finance a new state school funding formula that, unless adequately financed, will do more harm than good.

One popular take on the relief bill is that the pandemic has shifted Biden and congressional Democrats away from the business-first, anti-government ideology that has dictated how U.S. politicians of both parties approached economic policy for the last four decades.

Another take, the one Republicans like, is that the relief bill is a “blue state bailout” that rescues states run by Democrats who have just spent too darned much money.

Leaving aside the fact that only a few outliers and no serious person would suggest Nevada is now or ever has been a state that spends too much money on public services, the “blue state bailout” cry is also just flat wrong: Of the seven states, including Nevada, that have seen double-digit declines in revenue during the pandemic, four of them are run by Republicans.

And of the seven, a different four, but also a group that includes Nevada, have something else in common — no state income tax.

There are businesses and industries that have been thriving in Nevada, even during the pandemic, and not just mining. 

There is a constitutional requirement that allows eight Republicans to kill any state tax increase no matter what the other 3 million Nevadans think. 

And of course there is state constitutional prohibition on a personal income tax, forcing a perennially low-wage state to place a disproportionately large and unfair tax burden on people who can least afford it while Official Nevada, all zombie-like, thoughtlessly staggers along with budgets that rely on regressive sales taxes.

There is not now and has never been a push by Nevada’s elected Democratic “leaders” to rid the state of the economic obscenities enshrined in the state constitution and reform the state’s tax structure so as to put people ahead of industries. 

But we are getting a bill for Blockchainsville.

If the economic policy paradigm has in fact shifted in the U.S., the shift has yet to reach elected Democrats in Carson City.

So thank goodness Biden and congressional Democrats (including Nevada’s Democrats in Congress) came to the rescue of Nevada, a state that remains politically, ideologically and structurally incapable of rescuing itself.

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Hugh Jackson
Hugh Jackson

Hugh Jackson was editor of the Las Vegas Business Press, senior editor at the Las Vegas CityLife weekly newspaper, daily political commentator on the Las Vegas NBC affiliate, and author of the Las Vegas Gleaner political blog. Prior to moving to Las Vegas, he was a reporter and editor at the Casper (Wyoming) Star-Tribune.

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